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JUNE 2020 MANUFACTURING

OUTLOOK by ROYCE LOWE

GLOBAL MANUFACTURING IS SHOVING ITS NOSE OUT OF THE HOLE, BUT ONLY SLIGHTLY. SPACE X SHOT UP THERE. TRUMP HAS A LOT ON HIS PLATE.

The COVID -19 virus continues to take an awful global toll, and is still causing humanitarian and economic havoc. There has been “opening up” but its effects are unknown at the moment.

The BLS jobs report for May shows a gain of 2.5 million non-farm payroll jobs, with the unemployment rate at 13.3 percent. This reflects a limited resumption of economic activity, with employment up sharply in leisure and hospitality, construction, education and health services and the retail trade. Manufacturing gained 225,000 jobs, with the gains evenly split between durable and nondurable goods. There were gains in motor vehicles and parts (28,000), in fabricated metal parts (25,000) and in machinery (23,000). Construction jobs were up by 464,000, gaining back almost half April’s decline. Mining jobs continued to decline in May by 20,000, of which most, 16,000, were in mining support activities. Mining has declined by 77,000 over the past three months.

The Bureau of Economic Analysis recently released its ‘second’ estimate for the annual rate of Real GDP growth in the first quarter of 2020, putting it at minus 5.0 percent. The figure for the fourth quarter of 2019 was 2.1 percent. The ISM PMI figure for U.S. manufacturing retrieved a little ground in May, moving from 41.5 percent in April to 43.1 percent in May. The overall economy returned to expansion after one month of contraction.

IHS Markit’s remarks on the U.S. show weak demand leading to a significant decline in production and new orders, hence employment, along with the steepest drop in selling prices on record. COVID - 19 continues to disrupt supply chains. The IHS Markit PMI was at 39.8 percent in May, up from April”s 36.1 percent.

There should be some improvement with companies restarting production, so perhaps this is the start of an upturn, which will undoubtedly be slow in the light of high unemployment, job insecurity and corporate losses, all of which will put a brake on consumer and business spending.

U.S. LIGHT VEHICLE SALES The sales below for May 2020 are based on estimates, but are considered to be a good approximation of true figures. The total percent change for the month was minus 32.1 percent. The Seasonally Adjusted Annual Rate has been estimated at 11.8/12.2 million.

The month of April saw an increase in car sales, yearover-year, in China, of 4.4 percent, and this following 21 consecutive months of sales downturns. The same month saw an 80 percent year-over-year drop in car sales in Western Europe and the UK. THE ECONOMIST magazine, in its latest weekly report on world economies, highlights changes in Gross Domestic Product (GDP), Consumer Prices and Unemployment Rates for what it considers the world’s major economies. These data are not

necessarily good to the present day, but are mostly applicable to at latest the past two months, and show definite trends in the world economy. The figures are qualified as being the latest available, and with reference to a given quarter or month. The figures for GDP represent the % change on the previous quarter, annual rate. The consumer price increases represent year-over-year changes. The unemployment figures, %, are for the month as

noted.

Unsung

by JOHN KENNEDY, Ph.D., CEO, NJMEP

DEAR EDITOR: One of my favorite shows is called ‘Unsung’ on TV-One. The focus is music from many R&B and Soul artists… their tragedies and triumphs. Funny, that even though I know many of them already, I find myself rooting for a positive outcome. However, I always celebrate their talents and what they overcame in their lives. To me – this show provides me with inspiration, as they deserve the accolades, timely or not.

During the COVIC-19 Pandemic, we have a similar situation as we are currently stopping to recognize so many people that tend to just pass through our lives. While the loss of so many good people is difficult to fathom on any level, I am heartened to see that we are actually stopping to recognize the 1st Responders, Medical Staffs, Home Health Aides, Store Clerks, and Truck Drivers…to name just a few. Even with a mask on, we now ‘see’ them clearly.

It is about time.

That brings me to another episode on Unsung…a Made in New Jersey episode. Our 11,000 manufacturers and their 380,000+ employees who have quietly gone to work every day and kept making the items that we cannot live without for long. Those that protect us / medicate us / feed us / sustain us. They have done so without fanfare, and they, too, understand fully the risks they are taking to help others.

I do think that our Governor, Phil Murphy, has done a solid job overall, because dealing with a pandemic is not an easy lift. It is difficult to foretell how any of us would perform in such a situation, and it is so easy to ‘Monday Morning Quarterback’. His decision to keep 100% of manufacturing open in NJ put us ahead of many others states and shows his understanding of the value in a healthy Supply Chain. I also appreciate how he does ‘shout outs’ to various groups during his briefings; well-deserved. I was especially moved when he cited NJMEP (New Jersey Manufacturing Extension Program) for its work with the Industry and State on Critical Supply Chain (CSC). It was motivational to our Team that had been going 24/7 for about 8-weeks at the time.

While some of you may know me, I’d like to take a moment to unmask a few others here that have stood up. People like Rob Stramara, Lynore DeSantis, Peter Okun, Sally White, Kathleen Baldwin, Stacy Cooke, Chris

DePace, Laura Fisher, Kia Sanders, and about 30 others that have decided that they needed to make a positive difference every day during this crisis. Individuals that I am proud to work with at NJMEP. If you add in the (70+) experts that make up our Resource Team – and – the Professional Affiliates, many of both have work for no fee, then you get to see the real picture.

That being said, I would like to strongly suggest to Governor Murphy and so many others across the State to make sure that you include our Made in NJ Manufacturers in your ‘shout outs’ for what they have done – and – what they will do to drive us out of the inevitable financial downturn that will ensue. We will ignore this critical sector at our own peril, as COVID-19 has taught us several major ‘new’ tenets:

Being Prepared is not just a pithy motto for Scouts

We need to invest in and rebuild portions of our Supply Chain in NJ, and nationally

Everyone on Earth needs ‘stuff’ – so – let’s make it here in NJ

Diversity means all of us…together…we need everyone to succeed

Let me end by doing my own shout-out to a few amazing NJ-Based Manufacturing Firms. This list is by no means all-inclusive, but if you don’t know these companies, you should:

Shocktech Zago QPSI Unionwear Unex Suuchi General A&E Lamatek GEMCO Triangle Manufacturing Inrad Optics

LPS Industries Tektite Case Medical Weiss-Aug K&S Industries Kuehne Chemical City Theatrical Marotta Controls Opex DSM

…and so many more – Unsung

John W. Kennedy, Ph.D., Chief Executive Officer New Jersey Manufacturing Extension Program, Inc. 2 Ridgedale Ave, Suite 305, Cedar Knolls, NJ 07927 Cell: 201-506-0642 Email: jkennedy@njmep.org Website: www.njmep.org